Oil Slips Ahead of U.S.–Iran Talks, Strait of Hormuz Tensions Keep Volatility Elevated

Oil prices eased in early trading on Tuesday as markets turned cautious ahead of direct talks between the U.S. and Iran in Geneva.

Brent crude fell 0.9% to $68 a barrel, while U.S. West Texas Intermediate (WTI) slipped 0.8% to $62.66 a barrel. Traders are trimming positions as diplomatic developments take center stage.

What’s Driving the Move?

• U.S.–Iran Talks: Investors are awaiting the outcome of scheduled negotiations, which could influence sanctions policy and supply expectations.

• Thin Liquidity: ING analysts noted that reduced trading volumes due to Lunar New Year holidays have limited broader price swings.

• Strait of Hormuz Risks: Media reports indicate that Iran conducted live military exercises on Monday in the Strait of Hormuz — a vital oil transit chokepoint — heightening fears of potential disruptions if diplomacy fails.

• Russia–Ukraine Developments: Markets are also monitoring possible U.S.-brokered talks between Russian and Ukrainian officials, as any escalation or de-escalation could impact energy flows.

Market Outlook

While prices are softer in the short term, geopolitical risk remains elevated. The Strait of Hormuz handles a significant share of global oil shipments, and any disruption could quickly reprice supply risk into the market.

With diplomatic negotiations underway and regional tensions unresolved, oil is likely to remain volatile in the near term. Traders will be closely watching headlines from Geneva and developments in Eastern Europe for directional cues.